I'd learned long ago that the existing national currency systems are entirely faith-based

Only in failed states, ...

The level of function of the state doesn't have any effect on whether the currency is faith-based or not, it merely affects the amount of faith that people will have in that currency. Fiat currencies only ever have the value that people place in them, pretty much by definition. If the state dictates that, for its purposes, a currency has value and coerces behaviour to enforce that, it doesn't alter the quintessential nature of a fiat currency.

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Anybody got a syringe I can use to squeeze the magic smoke back into this?

In a functioning state, if everyone loses faith in fiat currency does it lose all its value? It does not, people will want it to relinquish their debts to government (or simply to facilitate trade with restrictive legal tender laws). There is demand, thus it will have value. Your lack of faith can not remove that utility, thus it can not be the full basis of its value.

Force is a more fundamental basis for the value of fiat currencies than faith.

Marco, you're neglecting to factor in cases where the State decides, for whatever reason, to de-monetize the existing fiat currency.This happens often, historically speaking. For instance recently in India. Also Nth Korea a few years ago. You can go to any coin collectors store, and cheaply buy a bundle of assorted de-monetized paper currencies from around the world. It's an educational experience.

'Fiat' means 'by command'. If you are holding currency (either physical cash or numbers in bank accounts), your store of value retains its value entirely at the discretion of the government. Hence the 'faith' involved isn't just on the part of the People. It also depends on good faith from the powers that be.

Whereas holding a currency that is literally in the form of physical gold and silver, isn't faith based. Doesn't matter what anyone (the people, the government, or you) believes. You still hold something of material value. There might be some argument over the exact value (eg loaves of bread per ounce of gold), but this actually remains remarkably stable over history. In Roman times you could buy a fine set of clothes for about an ounce of gold. Today, you can get a fine set of clothes for about an ounce. The dollar value of gold is more an indicator of the value (or lack of it) of the dollar, not of gold.

I'm waiting to see if the mathematical uniqueness and non-reproducibility of bitcoin and other crypto currencies will serve to give cryptocurrencies the permanency and allodial attributes of precious metals. I suspect not. But only time will tell.

It's very relevant that the number of different cryptocurrencies seems to be exploding. There's obviously no limit on the number of algorithms possible, which puts us right back into infinite printing press territory.

In a functioning state, if everyone loses faith in fiat currency does it lose all its value? It does not, people will want it to relinquish their debts to government (or simply to facilitate trade with restrictive legal tender laws). There is demand, thus it will have value. Your lack of faith can not remove that utility, thus it can not be the full basis of its value.

Force is a more fundamental basis for the value of fiat currencies than faith.

You argument only works where there is coercion. If there is free choice (say the black market, or a foreign market) then faith in a currency is all that matters.

One can get most results with enough coercion; if I put a gun to your head I could make you recant your position, but fortunately I'm more inclined to use rhetoric and logic.

The problem is that people are so inured to fiat currencies that many fail to see them for what they are and continue to believe that they have some intrinsic value. So much so that purely financial crises can bring the world to its knees despite the fact that the resources, workers, factories, demand and all the other elements of the economy continue to exist just as they did before said crises. That could not happen in a barter economy or one where money only had real intrinsic worth, except for some real physical disaster.

No one is arguing that fiat currencies have no utility, just no intrinsic value and what value they have is based on a collective belief in their value. Even the most debased fiat currency has utility, even if only as a source of combustible heating material, on a nail in the lavatory or as a collectable keepsake of the foolishness of governments - the Zimbabwean Dollar comes to mind.

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Anybody got a syringe I can use to squeeze the magic smoke back into this?

Bitcoin transaction fees are a bit of a fun killer as I have just discovered.

I have been saving $20/week for the last couple of months in bitcoin just for interest sake. Now I have 9 small bitcoin amounts in my wallet and it's worth more than double what I have put in. So I decided to sell it.However, dun dun, dunnn:- to convert it back into cash right now would cost me $100 in fees to get $200 in cash back!

This is partly because the transaction fees are quite high at the moment because there is a backlog. However even if they were normal I would be paying 10% or more in fees.

What I believe I needed to do is 'prep' for selling these by offering a small fee to combine the small transactions into one at a time when there is no backlog. To get it done cheaply, that transaction would take an long time to go through and therefore my ability to sell is out of my control.

Logically this makes a savings plan in bitcoin a bad idea if you are investing regular small amounts. It's a pretty big downside.

To quote Adam Chalmers? (@adam_chal)Bitcoin was supposed to demonstrate the power of a true free market. Instead it's full of scams, rent-seekers, theft, useless for real purchases and accelerates climate change. Mission accomplished,[/]

but this actually remains remarkably stable over history. In Roman times you could buy a fine set of clothes for about an ounce of gold

But why?

In practical terms, gold generally speaking, isn't astoundingly useful in an large scale, even less so in modern life than in antiquity, it's not really that rare really is it. There's piles of gold to satisfy demand, I don't think any industry (semiconductors for example) has trouble buying gold if they need to buy some.

I think gold, and silver, and diamonds etc are valuable mainly because they are desirable things to have, and that's purely because people, for no good reason have decided they are desirable things to have.

Diamonds are an even bigger case in point, gem diamonds have essential zero practical use in any sort of scale that matters, and yet they are assigned by the people such fantastic monetary equivalence that they are used, much the same as bitcoin in fact, for exchanging value when you don't want to exchange money (ie, blackmarket). Industrial diamonds, the ones we actually use, have all the practical applications, but none of the value. Neither gem diamonds nor industrial ones are rare, hell we can manufacture them.

All it takes is for the people to decide that gold, silver, diamonds really are not "all that" and whoosh, there goes the market, there would be piles of supply to satisfy the actual users of them in practical applications for a long time.

Bitcoin isn't really that much different, in fact the parallels with diamonds especially are really close if you think about it - an artificially constrained supply of a not-rare thing, where the valuable type has little practical purpose (ie, bitcoin) and is valuable because people say it's valuable, and the non-valuable type has lots of practical purpose (eg various altcoins due to low fees/bigger blocks/segwit etc...) and probably should be more valuable because it's more useful but isn't more valuable because the people say it's not valuable.

People are strange.

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Bitcoin transaction fees are a bit of a fun killer as I have just discovered.

I have been saving $20/week for the last couple of months in bitcoin just for interest sake. Now I have 9 small bitcoin amounts in my wallet and it's worth more than double what I have put in. So I decided to sell it.However, dun dun, dunnn:- to convert it back into cash right now would cost me $100 in fees to get $200 in cash back!

This is partly because the transaction fees are quite high at the moment because there is a backlog. However even if they were normal I would be paying 10% or more in fees.

What I believe I needed to do is 'prep' for selling these by offering a small fee to combine the small transactions into one at a time when there is no backlog. To get it done cheaply, that transaction would take an long time to go through and therefore my ability to sell is out of my control.

Logically this makes a savings plan in bitcoin a bad idea if you are investing regular small amounts. It's a pretty big downside.

To quote Adam Chalmers? (@adam_chal)Bitcoin was supposed to demonstrate the power of a true free market. Instead it's full of scams, rent-seekers, theft, useless for real purchases and accelerates climate change. Mission accomplished,[/]

Well scams etc are hardly new, so no surprises there. The price volatility is pretty normal, plenty of other examples of that.The transaction problems are a major issue with Bitcoin obviously but probably could be fixed by a better implementation.

However, I agree, I think the power usage on its own makes the concept non-sustainable long term. Trading electricity for x coins just isn't a good idea these days.

but this actually remains remarkably stable over history. In Roman times you could buy a fine set of clothes for about an ounce of gold

But why?

In practical terms, gold generally speaking, isn't astoundingly useful in an large scale, even less so in modern life than in antiquity, it's not really that rare really is it. There's piles of gold to satisfy demand, I don't think any industry (semiconductors for example) has trouble buying gold if they need to buy some.

I think gold, and silver, and diamonds etc are valuable mainly because they are desirable things to have, and that's purely because people, for no good reason have decided they are desirable things to have.

You're missing out one crucial characteristic of gold, the thing that makes it stand out. It is incorruptible.

OK, with relatively modern chemistry (relative to humanities relationship with gold) you can change gold, but natural processes don't. You can acquire a mass of grain, you can build a palace, but if you leave then for 50 years they will have decayed but gold will have not. That is both a practical and 'magical' quality. Combine that appeal with limited availability and instant recognisability in both natural and coin form and you can see why gold stands out in history.

« Last Edit: December 09, 2017, 02:36:44 am by Cerebus »

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Anybody got a syringe I can use to squeeze the magic smoke back into this?

Also there is another thing to worry about beside bitcoin itself. Lets assume it fails. How many of you are in the video card business? Also how many of you are gamers? It'll be interesting times. Be aware of Nasdaq.

All of the bitcoin is in one wallet, and I think one address - at least they all came from the same institution to the same wallet so I think that is the case.

I initially tried to send close to the full amount in the wallet and then kept reducing it after getting 'Insufficient funds to pay fee' type messages. The wallet is Copay and it has a 'Send Max Amount' function, so I tried that. It tells me that the fee is $100 NZD which is 30% of the sending amount. Reducing to 'super economy' drops it to about $90 NZD. Obviously the lower I go the longer it will take to happen.

On the faq they mention this:

I think this is part of how Bitcoin works, and probably not a well understood part.

That sounds like you have multiple addresses, copay might be hiding that from you to make things "simpler". $90/15 would be 6 different addresses.Some wallets will create a new address every time you choose to "add funds".See if you can find a list in there, the address is 26 to 35 characters long (https://en.bitcoin.it/wiki/Address).

Of course for a useful crypto-currency, having 6 addresses would not be a major inconvenience and fees would be pennies or a few dollars at most.

All of the bitcoin is in one wallet, and I think one address - at least they all came from the same institution to the same wallet so I think that is the case.

I initially tried to send close to the full amount in the wallet and then kept reducing it after getting 'Insufficient funds to pay fee' type messages. The wallet is Copay and it has a 'Send Max Amount' function, so I tried that. It tells me that the fee is $100 NZD which is 30% of the sending amount. Reducing to 'super economy' drops it to about $90 NZD. Obviously the lower I go the longer it will take to happen.

On the faq they mention this:

I think this is part of how Bitcoin works, and probably not a well understood part.

That sounds like you have multiple addresses, copay might be hiding that from you to make things "simpler". $90/15 would be 6 different addresses.Some wallets will create a new address every time you choose to "add funds".See if you can find a list in there, the address is 26 to 35 characters long (https://en.bitcoin.it/wiki/Address).

Of course for a useful crypto-currency, having 6 addresses would not be a major inconvenience and fees would be pennies or a few dollars at most.

Yes you may well be right, they do say something to that effect in the FAQ for 'privacy' reasons. I haven't yet been able to confirm/deny that this is what has happened though, will dig deeper when I get a chance.

Seems a tad obsessive, but that is the nature of the beast at the moment. When the inevitable bitcoin crash comes hopefully something better will rise from the ashes. It is clearly not a currency, it is more like a virtual commodity as it is not practical to trade with.

You're missing out one crucial characteristic of gold, the thing that makes it stand out. It is incorruptible.

OK, with relatively modern chemistry (relative to humanities relationship with gold) you can change gold, but natural processes don't. You can acquire a mass of grain, you can build a palace, but if you leave then for 50 years they will have decayed but gold will have not. That is both a practical and 'magical' quality.

Gold is like the saying about water molecules - take any given glass of water and it contains thousands of molecules that one passed though Albert Einstein.The gold you buy likely contains a small percentage that once hung around the neck of a Pharaoh in ancient Egpyt.

Haven't read disscusion so far, but one thing probably that was't mention was this;Bitcoin is not a Bubble it is a REVOLUTION !!!emphasis, solely mine.Dont expect a fair evaluation from those that their very jobs (and very good paying jobs) are at stake.

You're missing out one crucial characteristic of gold, the thing that makes it stand out. It is incorruptible.

OK, with relatively modern chemistry (relative to humanities relationship with gold) you can change gold, but natural processes don't. You can acquire a mass of grain, you can build a palace, but if you leave then for 50 years they will have decayed but gold will have not. That is both a practical and 'magical' quality.

Gold is like the saying about water molecules - take any given glass of water and it contains thousands of molecules that one passed though Albert Einstein.The gold you buy likely contains a small percentage that once hung around the neck of a Pharaoh in ancient Egpyt.

Actually it's not. Gold is not like water, it does not circulate in nature.